Certified Government Financial Manager (CGFM) Practice Exam 2025 - Free CGFM Practice Questions and Study Guide

The three components of Net Position are indeed invested in capital assets, restricted, and unrestricted. These classifications are crucial for understanding an organization's financial standing, especially in the context of government and not-for-profit entities.

Invested in capital assets refers to the assets held by the organization that are used to provide services and that are not available for future spending. This includes property, buildings, and equipment that are essential for operations and are not readily convertible into cash.

Restricted net position includes resources that are subject to externally imposed restrictions, such as grants or donor requirements. These funds cannot be used for general purposes but must be spent according to specific guidelines.

Unrestricted net position represents resources that are available for any legitimate purpose and are not subject to external restrictions. This offers the organization flexibility in how they manage their financial resources.

By understanding these three components, stakeholders can assess the financial health and operational capacity of an organization, making it clear why this answer accurately reflects the components of Net Position. The other options do not appropriately reflect these essential classifications within the framework of net position as outlined in financial reporting standards.